PRODUCTION FACTOR CONTRIBUTIONS TO THE ECONOMIC GROWTH OF OECD ECONOMIES AT THE INDUSTRY LEVEL
Saša Drezgić, PhDUniversity of Rijeka
Faculty of Economicy
15th Dubrovnik Economic Conference
CONTENTS
INTRODUCTION LITERATURE OVERVIEW METHODOLOGY DATA RESULTS
INTRODUCTION
industry level growth accounting applied on the case of OECD economies
Development of new databases (EU-KLEMS, STAN)
OECD countries – available data and homogenous group of countries
ECONOMIC GROWTH AT THE INDUSTRY LEVEL
Voluminous aggregate industry level research - Sturm (1998), Kamps (2004)
Minasian, 1969, Lynde and Richmond, 1993, Jorgenson and Stiroh, 2000
Value added vs. gross output
METHODOLOGY
Are variables stationary? Within, Random effects and Olley-Pakes
procedure FMOLS – fully modified OLS
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DATA
15 OECD countries Australia, Austria, Czech Republic,
Denmark, Finland, Germany, Italia, Japan, Korea, Netherlands, Portugal, Slovenia, Sweden, United Kingdom and United States
1995 to 2005
DATA – variables used
value added net capital stock gross fixed capital formation total hours worked by persons engaged total hours worked by high-skilled
persons engaged
DATA - industriesA Agriculture, hunting and forestry B Fishing C Mining and quarrying D Manufacturing E Electricity, gas and water supply F Construction G Wholesale and retail trade; repair of vehicles and household goods H Hotels and restaurants I Transport, storage and communication J Financial intermediation K Real estate, renting and business activities L Public administration and defense; social security M Education N Health and social work O Other community, social and personal service activities
RESULTS – unit root tests
Levin, Liu and Chu (LLC) test, Im, Peseran and Shin, (IPS) test, ADF, PP test
Small sample issue Differenty dynamics? Mix of stationary and non-sationary
variables
RESULTS – traditional estimation
Coefficients on capital input high and significant
Endogeneity issue – Olley-Pakes procedure
human capital variable shows robust positive and significant results only in the sector of manufacturing
RESULTS – FMOLS
Variables are cointegrated Endogeneity not resolved Point estimates differ significantly Human capital positive at the aggregate
industry level
CONCLUSION
positive effects of capital accumulation across all sectors and share of high-skilled persons engaged in the sector of manufacturing.
Issue of endogeneity remains Further research
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